THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

RICHARD QUEST, CNN INT'L ANCHOR, QUEST MEANS BUSINESS: A right, royal rumpus. The Queen fires the starting gun on the British elections, so to speak.

Resumes at the ready. European leaders prepare to choose a president. We hear from one of the candidates, Tony Blair.

And regret about the recession. Goldman Sachs says it's sorry.

I'm Richard Quest. Tonight, I mean business.

Good evening. Britain's Queen Elizabeth reads the words. It is her ministers who write the script. With months to go before he faces the voters, Britain's Prime Minister Gordon Brown has set out a manifesto for austerity. Or as perhaps he would call it, prudence.

While vowing to reign in greedy bankers it was, of course, the Queen's speech. The speech written by the government, which for the first time in a major economy has set out detailed provisions on how they will deal with bankers' bonuses, by law; and also of course, the question of dealing with the budget deficits.

The Queen's speech has, of course, attracted huge attention, mainly because the powerless state of Britain's economy. For instance, one of the issues in the speech, the so-called fiscal austerity bill, the fiscal responsibility bill, it commits to cutting the annual budget deficit by half. At the moment that is about $300 billion dollars, in the current fiscal year, by half, by 2014. Some say it is not possible. The Queen says her government will do it.

(BEGIN VIDEO CLIP)

QUEEN ELIZABETH II, UNITED KINGDOM: My government's overriding priority is to ensure sustained growth. To deliver a fair and prosperous economy for families and businesses as the British economy recovers from the global economic downturn.

(END VIDEO CLIP)

QUEST: Now, the other thing we have, fiscal responsibility. We also have financial regulation, upping the Financial Services Authority's right to curb bonuses. This idea would be that the FSA could tear up bankers' contracts from 2010, only, of course, if they felt they were excessive. It is an issue that has not been tested legally. It has great popular support. It was in the Queen's speech.

(BEGIN VIDEO CLIP)

QUEEN ELIZABETH II: My government will continue to reform and strengthen regulation of the financial services industry, to ensure greater protection for savers and taxpayers. Legislation will be brought forward to enhance the governance of the financial sector and to control the system of awards.

(END VIDEO CLIP)

QUEST: Now as far as the economic and financial worlds are concerned these two measure are the principally important part, the financial responsibility and the fiscal act. But the reason, of course, is June 2010, which is when Gordon Brown has to go the public, to the election, for a general election. It is very likely that he will go before then, but that is the scenario under which this Queen's speech has been set out.

Atika Shubert is outside the Palace of Westminster.

Atika, the opposition claim that this was about electioneering, not governing. But these two measures, fiscal responsibility and regulation, are core to the plan.

ATIKA SHUBERT, CNN INT'L. CORRESPONDENT: They are core to the plan. And Prime Minister Brown's government claims that they can be pushed ahead before the general election. The Conservative Party, however, says there is no way that is going to happen. And David Cameron, the Conservative Party leader went on the attack today. Here's what he said.

(BEGIN VIDEO CLIP)

DAVID CAMERON, CONSERVATIVE PARTY: He said that we would lead the world out of recovery. Do we all remember that one? In fact, the rest of the world, America, France, Germany, the Euro zone, they are all out of recession and we're still in it. And his whole specialism, the whole of specialism is meant to be financial services, regulation, the future of banking. Yet, in this country, we have had the biggest bank bailout in the world. The biggest bank run in Europe, and proportionate to the size of our economy, more support pumped in, from taxpayers, into the banking system, than any other major economy.

(END VIDEO CLIP)

SHUBERT: That is the Conservative Party leader pressing ahead on the attack there. And basically the Conservative party sees its opportunity here, because Labour has taken a lot of the blame, whether fairly or unfairly, for not only the economic recession but the expenses scandal, all sorts of things. And so the Conservative Party sees that they may be able to get a victory next year.

QUEST: How realistic is any of this going to be to get past parliament. There is only a handful, perhaps, of maybe a couple of dozen parliamentary days between now and when the next election will be called.

SHUBERT: That is right. There is only about 70 or 80 days in parliament before the elections. And the fact is there is not a lot of time to get this legislation put forward. So it really depends on the government picking and choosing what it wants to really push through parliament. And right now it seems that those very bills that you mentioned, that reform of the financial sector, is what Prime Minister Brown is hoping will be the center piece for his legislative agenda. And clearly hoping that that may keep labor in power when the elections come.

Electioneering or governing, that is the issue that is being put firmly on the table. Philip Hammond is a member of parliament for the opposition Conservatives and the spokesman for his party on finance. He would be their number two at the Treasury if they win the next election. I put it to him, the government has now set an agenda of financial services and fiscal responsibility and the question, of course, is why he doesn't support these goals?

(BEGIN VIDEOTAPE)

PHILIP HAMMOND, FINANCE SPOKESMAN, CONSERVATIVES: We need to wait and see exactly what is in the bill. Of course, we all want to see the deficit coming down. But the truth is you don't reduce the deficit by passing an act of parliament. You reduce the deficit by setting out a credible plan and then implementing it. And we've seen nothing from the government that looks like a credible plant to deal with the fiscal problems Britain faces.

And as we understand it, the bill that they are proposing to bring in will not include any independent assessment of the measure that are taken. And without an independent assessment it is, frankly, meaningless.

QUEST: But it does give that commitment which markets have sought, to reduce the deficit, by half, by 2014. Now, that in itself is a starting point, that one might at least applaud.

HAMMOND: Well, look, the statement that the deficit is going to be reduced by X amount by such and such a date is a political statement. The markets will listen to it as a political statement. And they will give it the credibility that they can attribute to it, based on the credibility of the politician who makes that statement.

And frankly, Gordon Brown, the man who delivered us this deficit, the man who has failed to set out a plan to get us out of it, and the man who is likely to be out of office in a few month's time, is not a credible deliverer of that message.

What the markets understand is that Britain needs a radical change of direction in order to get out of the hole that we are now in.

QUEST: So, with that scenario, what -- do you feel that you are now being boxed into the position where you have to say what your spending cuts and your spending plans would be, with more specificity than your party has done so far?

HAMMOND: Absolutely not. We are not being boxed into any position at all. We already made it very clear that we don't think Labour's aspiration to half the deficit by 2014 goes far enough. We have already made it clear we don't think they are starting soon enough. We would start next year, with reducing public spending. And we don't think that what they have set out is credible. But we have already set out, in far more detail than Labour has, some of the measures that we will implement in order to get on top of this deficit.

The ball is firmly in Labour's court and what they are trying to do, with this bill, is gloss over the lack of detail about how they would really go about tackling the deficit that faces this country.

QUEST: Mr. Hammond, did we hear, this day, the first firing, the first salvo, of next year's election, do you believe? On both sides, in that respect?

HAMMOND: Whether or not you think it is the first salvo, I'll leave up to you. But it is certainly a salvo. It is very clear. And cabinet ministers have made no attempt to disguise this fact. That this is not a Queen's speech for government, it is not about serving Britain. It is about saving the Labour Party, about trying to create traps and dividing lines for the election ahead.

(END VIDEOTAPE)

QUEST: That is the way the opposition party sees it. Electioneering not governing. Joined now by John McFall, the chairman of the U.K.'s Parliament's Treasury Select Committee, which I think is a fair way of saying one of your -one of Labour Party's senior politicians on finance.

And I have to say, he's dressed quite appropriately for QUEST MEANS BUSINESS tonight. We thank you for coming in.

And electioneering not governing; these measures stand no realistic chance of getting through parliament.

JOHN MCFALL, CHAIRMAN, SELECT COMMITTEE: Actually if you look back to 1992, when the major government were at the last Queen's speech, there was a very short period of time and they pushed through the poll tax bill and did privatization, disastrously, of the railways. So there is an opportunity for us to work together. And if the Conservatives feel that there is merit in our monetary (ph) bills, which I think there are, then we can get something done.

QUEST: Let's take the two bills that we are talking about tonight. First of all, the fiscal responsibility, the cutting of the budget deficit. Parliament, there is no sanctions if it fails to happen. The bill, as you are going to be debating, does not actually have a sanction element to it. Parliament has to be informed, there has to be committees, but that is about it. It is a toothless tiger.

MCFALL: I don't think it is a toothless tiger. I think what the government are doing, is they are making this issue transparent. They are handing this all to the House, so that the House has a view on this. And I think this is important. I think this is important for the markets point of view that we have to seem to be having a credible policy on this and there has to be transparency.

QUEST: So, why not put - why not make it more pro-script (ph), and actually put rules and regulations of what can't be done and what can be done?

MCFALL: Well, they want to tie it up with rules and regulations.

QUEST: To make it effective, yes, you may have to.

MCFALL: No, no, but it can be effective by parliamentary scrutiny. And that is the issue that is important. I find, myself, as chairman of the Treasury Committee, with my committee being effective just for the very fact that an issue comes before us, and we make it a public issue and we make it transparent.

QUEST: On the bankers' bonuses question, nobody would defend the indefensible that we have seen, but giving the FSA, the right rip up contracts, is that, first of all, questionably illegal. And second of all, some would say necessarily the FSA has got the powers that would be required.

MCFALL: Actually, if you look at the courts, in the United Kingdom at the moment, they can tear up contracts if the contracts are not drawn up properly. So it is for their fair safety to establish these rules and the financial services companies have to draw them in line with that. And we also have the competition commission in this country, which can straight down, agreements as a result of that. So this is not per - it doesn't exist anywhere else at the moment.

QUEST: The opposition party would say, well all these, they are never going to get on the statue book, and even if they do, you'll be out of office next year.

MCFALL: Well, who know? Listen, I think the big issue, from the Queen's speech, is the issue of government here. What role should government have? If you look at the financial crisis, governments have been the only show in town, whether we talk about America, whether we talk about the U.K. and governments have had a role.

David Cameron has said that he wants smaller government. But he hasn't defined what that is. I think government have to be enabling and to be supportive of people at the time of need. We have rising unemployment, so (UNINTELLIGIBLE) government going to do things. We have banks that have come to their knees, so they have to have governments rescuing them.

QUEST: John, many thanks indeed. Please, come back again. And thank you for raising the --

MCFALL: Hopefully I'll be better dressed.

(LAUGHTER)

QUEST: Yes, right. Many thanks. We look forward to having you on the program again. Raising the standard of attire on this program.

Max Foster, at the CNN News Desk.

(NEWS BREAK)

QUEST: If I say to you, Max - don't go. If I say to you, Max, which countries are the G2, would it be China and the U.S.? The U.S., the European Union? What do you think?

MAX FOSTER, CNN INT'L. NEWS ANCHOR: European Union, does that count as a country? I would go for European Union and the U.S., in that case.

QUEST: Oh, there we are then. Exactly. The debate we will have when we come back in just a moment, is which countries make up the G2?

(COMMERCIAL BREAK)

QUEST: Like a great big bar of dairy milk chocolate, it seems Cadbury's is impossible resist. The British company is now tracking takeover interest from three big rivals. U.S. chocolate maker Hershey's and the Italian confectionary group, Ferrero. Both say they are considering their options. Possibly a joint bid. Cadbury's, who shares rose this session for the fifth day in a row, is fending off a $17-billion offer from the U.S. food giant Kraft. It might be all to rich for the blood.

After a long search the iconic British retailer High Street retailer, Marks and Spencer has named its next chief. He's Mark Boland, currently the boss of a supermarket chain called W.M. Morrison's. He takes over as chief exec in the new year. Shares at M&S soared over 5 percent.

It wasn't enough to lift the FTSE into the positive, over and above. Here are the closing numbers, weak data on house building in the U.S. dented investors confidence.

Now, a job even bigger than that of the CEO of Marks and Spencers, if you can imagine it, it is up for grabs. We are talking about the president of 27 nations, 500 million people, the European Union. Only 27 people get to actually vote in all of this. In all, around 24 hour's time, EU leaders will sit down and they will choose who they want to be the first president of the European Union. And also, an interesting role, called the high commissioner, the high representative for foreign affairs. The process could drag on late into the night.

Officially, the EU isn't naming the candidates. We know a few of the people in the running. There is the Belgian Prime Minister Herman Van Rompuy, who is emerged as an unlikely front-runner. Well, that is not being rude, it is not (UNINTELLIGIBLE). That is just what some critics are saying. He said to have got the backing of France, Germany, and Poland.

The Dutch Prime Minister Jan Peter Balkenende is also believe to be under consideration. And a well-known face on the European circuit.

The former Latvian President Varia Vike Freiberger is the only female candidate who is being touted. And is sort of come in late at the end and might actually do the deed.

Britain's choice is the former Prime Minister Tony Blair. Now, earlier today I was talking to Mr. Blair on other matters, which you will hear in the program. But, of course, I couldn't not ask him about the EU presidency. Was he going to put his name forward?

(BEGIN VIDEO CLIP)

TONY BLAIR, FMR. U.K. PRIME MINISTER: It is a simple question. It is not an answer probably that you want me to give, but I'm focused on Sierra Leone. Actually, I'm focused on the work that I do at the moment. And that' s really all I've got to say on it.

(END VIDEO CLIP)

QUEST: So, we are none the wiser from Tony Blair. Of course we'll have to discuss that more, when the results are known.

The point of having a president is to give Europe a single, recognizable figurehead, that will represent its interests on the world stage. It comes at President Barack Obama tries to strengthen U.S. ties with China and bolster his country's influence.

CNN's Jim Bolden, now investigates whether a new EU president will give Europe any more clout.

(BEGIN VIDEOTAPE)

JIM BOLDEN, CNN INT'L. CORRESPONDENT (voice over): When it comes to global talking shots, with a G, or group attached to a number, the G8 is taking a backseat to the G20. As the world's biggest industrialized nations have joined with, among others, the fast-growing brick countries, that is Brazil, India, and China.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The more that China and the United States will be able to work cooperatively on a whole range of issues.

BOLDEN: This week's meetings between President Barack Obama and Chinese President Hu Jintao have strengthened talk of a so-called G2. But what about the European Union?

GIDEON RACHMAN, "THE FINANCIAL TIMES": The moment it suits neither China, nor the U.S., to try to run the world as a G2, the Americans think, well actually, the Chinese are an authoritarian power. It would be quite helpful to have another big set of democracies, like the European Union, or India, at the table.

BOLDEN: After all, the EU has half a billion consumers, and an economy much bigger than that of China. China's per capita GDP ranks below countries like Algeria and Turkmenistan. Is it not time to see the G2 as the U.S. and the EU? Or perhaps a G3? Commentators say EU foreign policy will make that hard to achieve.

RACHMAN: You saw that over Iraq, you saw it over the Balkans, and so no matter how much they may say in theory, yes, yes, we want to be united, we want to be the G3 with China and the U.S., when their national interests at stake, they tend to go their own ways.

BOLDEN: And all the G20 talk in the next few weeks will be about climate change, where the EU has one voice, but it is not a big player.

DAMIAN CHALMERS, LONDON SCHOOL OF ECONOMICS: Climate change, if one was looking at that, I think the big deals are to be don between the U.S. and China, to be hones there. But Europe has tried, at least rhetorically, to push the debate.

BOLDON: But now Europe is on the brink of anointing a full-time president of the council, plus a de facto foreign minister. Still, skeptics say that won't increase Europe's influence yet.

LORRAINE MULLALLY, OPEN EUROPE: People are looking to this, on Thursday, as a beginning of a new kind of clarity on where the EU stands on international issues. I think they'll be very disappointed. In fact, they may even be more confused. You'll have an EU president and EU foreign minister, a president of the commission. And not to mention, of course, the 27 heads of state.

BOLDEN: A void, perhaps, being filled by China, since its ongoing purchase of U.S. Treasury bonds have fueled the U.S. the economic stimulus package. But that doesn't necessarily translate to more power, in many minds.

JAMES RUBIN, FMR. U.S. ASSIST. SECY. OF STATE: I don't think China gets the leverage that people suggest out of this. I think they are dealing with, or buying Treasuries because it is in their interests.

BOLDEN: So, Europe might be taken a step closer to a G3 to become a global counterweight. Jim Bolden, CNN, London.

(END VIDEOTAPE)

QUEST: So there are 27 members of the Union. In the next few years, a few more will join. In just a moment or two, I'll be speaking to the prime minister of Macedonia. One of the countries that is applying to join the EU club. The prime minister is with us, after the break.

(COMMERCIAL BREAK)

QUEST: Welcome back.

The prime minister of Macedonia is promoting his country's candidacy to join the European Union. On a visit to Britain and Ireland, Nikola Gruevski is meeting with officials in London. He's looking to encourage foreign investment in Macedonia, and promote the cause of the country.

The International Monetary Fund says Macedonia has weathered the economic downturn better than most in the region. It actually says that there is a brighter outlook and a graded growth for this year and the next. That's the forecast. There are serious challenges for the coming years. Unemployment in the first quarter of this year stood at 32 percent. Macedonia runs a large trade deficit leaving it dependant on foreign finance.

The IMF recently said, progress toward EU acceptance would bolster prospects for inward investment. But obviously, there has to be that crucial convergence of economies, that makes the whole thing worthwhile and not to be a disaster in the making.

The prime minister joins me now. Thank you for coming in. Many thanks.

NIKOLA GRUEVSKI, PRIME MINISTER, MACEDONIA: Thank you for the invitation. It is a pleasure to meet you.

QUEST: You are very welcome.

GRUEVSKI: Now, the first thing, is when we look at the European Union, negotiations, you are still some years away from negotiations and admission. What is your realistic assessment of when you could enter the Union?

This year, October 14 we received a positive report from the European Commission, which this report is sent to European Council, with recommendations for opening of negotiation process. If everything is going well, we have to start negotiations next year. And keeping in mind that we are a small country, and very first we cannot talk to the - can't change the faith.

QUEST: Faith.

GRUEVSKI: I believe for three and half, four years maximum we will finish negotiations.

QUEST: Won't you be disappointed if your country is not a member by 2014? 2015?

GRUEVSKI: Probably will be. Probably it would be disappointing if 2014 we are not -we have a good chance now and we are working on this. We did a lot of modernization, a lot of reforms, a lot of things are done. And as a result of this we have positive reports and recommendations for starting negotiations. And we will continue in the future to make the reforms, recommendations, and so on.

QUEST: It is one thing to be a part of -and one thing the Union is seeing, with the new countries - it is one thing to be a, if you like, an official member, but has the ethos, has the philosophy, of what the Union stands for, democracy, capitalism, free markets, open markets, all these things are the coming along with, or are you having to force them upon you country?

GRUEVSKI: Of course, we are sharing the same values of --

QUEST: Are you?

GRUEVSKI: Yes, yes.

QUEST: You see, in a letter to your own politicians.

GRUEVSKI: Yes?

QUEST: You talk about, "It's time for a final battle against politicians, and leave behind waste, misery, apathy, crime, lies, and twisted values. It is time to thwart their attempts of taking Macedonian citizens and Macedonia hostage."

Now, I understand that is politics.

GRUEVSKI: Yes. That's a letter that I sent to the members of the party, that I'm usually I'm doing once in a year. Many people in Macedonia understand this is preparation for early elections, which is I would say, exclusively for you, it is not true. Actually, this is just kind of mobilization for the people to join the political (ph) forces in the country.

QUEST: The European Union is obviously extremely important to your future goals for the country, very important. But with unemployment at such high levels, high deficits -

GRUEVSKI: Just to say that unemployment was much higher. It is reduced now.

QUEST: Right, right.

GRUEVSKI: It is still very high, but the process is very positive.

QUEST: Do you believe that next year you will enjoy the sort of growth that will enable you to bring unemployment down and will able you to start shifting the structural imbalance in the economy. I think that unemployment will go down. Not just because we introduce many good measures, which have impacted the investors. For example, we implemented flat-rate tax.

QUEST: Oh.

GRUEVSKI: A flat tax, we have 10 percent.

QUEST: Oh, the flat-rate tax. The flat rate tax.

GRUEVSKI: Yes. 10 percent, personal income tax, 10 percent profit tax. And for the profit, which is not distributed through dividends, there is zero percent of tax. So, the European perspective will help and encourage the investors in the future to use these benefits. And that means you are working - more jobs.

QUEST: Prime Minister, please come back again. Thank you.

GRUEVSKI: Thank you.

QUEST: I'm going to have to break it down, because we have some -stay there for a second -we have some important news, which (UNINTELLIGIBLE).

The football World Cup will be staged on the continent of Africa, for the first time, next year. That much we know so far. And today, marks the final day of qualifications for the tournament. Just minutes ago Algeria and improbably World Cup first, by beating North African rivals, Egypt, one -nil. It is the first time in 23 years that Algeria has made it to the World Cup. If it is highlights you want, "WORLD SPORTS" will have a full wrap up of the day's World Cup action. Algeria, though, headline there, goes to through.

In just a moment, offering soothing words and a few $100 million; Goldman Sachs is putting on a PR blitz to buy itself a better image. Anybody swallowing it?

(COMMERCIAL BREAK)

QUEST: Good evening.

I'm Richard Quest, QUEST MEANS BUSINESS.

This is CNN.

The markets that are open and doing business, brisk business, are in New York, where the Dow Jones Industrials at this hour -- a lot of bell ringing tonight. It's in the (INAUDIBLE).

We're now under 10400. We're down 44 points. It's really just half a percentage point and not something to be too concerned about after consolidation. But it's worth bringing it to your attention.

If love is never having to say you're sorry, then the old saying goes, Goldman Sachs has a long way to win over public opinion.

The chief executive has publicly apologized for some of the companies actions. He's offering up hundreds of millions of dollars to small businesses. Goldman's offensive is obviously designed elementary just P.R. But is there more to it than that?

Maggie Lake is in New York -- Maggie, this isn't the first time that the CEO of Goldman has apologized. He has said it in sort of round about ways before, mis -- you know, the old mistakes were made, bankers have things to answer. But this is the first mea -- real big mea culpa.

MAGGIE LAKE, CNN CORRESPONDENT: It is. I'm sorry is -- is the word people want to hear. And you're right. And we're seeing a little bit of a shift for Goldman Sachs and maybe a sign of just how concerned they are about what can only be called a public relations disaster.

Lloyd Blankfein -- you know, which, during the height of the crisis, we didn't hear him say I'm sorry -- did publicly come out speaking about it and said that. He said, as you said, the round about things were done, mistakes were made. But he said, we apologize.

So it was a -- that. Also today, unveiling an initiative for small businesses. It's being chaired by one of their largest shareholders, Warren Buffett. He's one of the chair people -- $500 million, $300 million for boosting capital, mentoring, networking, that type of thing; $200 million for college scholarships.

They're doing this, Richard, because people are literally still out on the street protesting against Goldman Sachs. Just this week in Washington, D.C. People turned out outside an office that lobbies for them, expressing their anger.

We talked to a P.R. executive. They say they're not going far enough.

(BEGIN VIDEO CLIP)

RICHARD LAERMER, RLM PUBLIC RELATIONS: This doesn't work, because most people are looking at this now and going, that's all you can do?

This is it?

You -- you know, Buffett's behind this. Buffett will do this with or without you. So it's nice that you have friends in high place, but in the end, you need to think about how you put the message out there. And right now, putting message out there as an apology and then money that isn't really very much makes people just look at you just as poorly as they saw you when you said that God created capitalism.

(END VIDEO CLIP)

LAKE: Actually, Richard, obviously referring to that joke that we now know about doing God's work. That Blankfein has also said he regretted and was taken out of context.

Here's the thing. Here's the reason that this small busur -- business initiative may not go down well in a P.R. way -- $500 million, that is less than 3 percent of the almost $22 billion they have set aside for compensation -- a drop in the bucket. And people get that, Richard.

QUEST: You know, yes, 2.3, I think, percent I saw as the number this morning.

But, Maggie, they say they're sorry. Goldman Sachs was being described as having (INAUDIBLE) that article evil, the evil lot.

And what more do people want?

They're not going to go put themselves in stocks at the end of Broad Street and let people throw rotten vegetables at them.

LAKE: No, but I think they wanted recognition. They want to see something -- a -- a change in business. You know, a lot of the -- the profits they're getting are still coming from trading. They got all that government money. They're not lending it out. They're not operating as a bank should be.

They -- they want to see a little bit of a change in the way they do business. And it may not just be Goldman. And -- and Goldman, they also want to see the fact that they understand the -- the -- the tone, the situation we're in right now. They've been so tone deaf to the mood of the country, the problems facing people. They've been seen as arrogant. And these are not the kind of times where joking goes down well. These are dark times. People are -- are in a tough situation.

So they want to see a change in posture and they want to see a little bit of a change in business. And Goldman needs to do it. This is a serious problem for them.

QUEST: Maggie Lake in New York.

Many thanks.

Now, in Britain's parliament today, the government announced plans not only for fiscal cutting of the deficit, but also measures that would allow them to rip up bankers' contracts if pay was excessive. It starts with a cornerstone of Gordon Brown's bid, perhaps, on economic grounds, for reelection.

The liberal Democrat Party opposition says -- has condemned the planned Fiscal Responsibility Bill as absurd.

I spoke to the Lib Dems treasury spokesman -- he's Vince Cable -- and asked him if it was really wise to make it such a political issue, when there were so many other economic worries out there.

(BEGIN VIDEOTAPE)

VINCE CABLE, TREASURY SPOKESMAN, LIBERAL DEMOCRATS: Well, it's absolutely right to focus on the economy. And, of course, part of that is about the budget deficit. It isn't the whole story. We have to worry about economic recovery, as well, and how the banking system performs. But it's -- it's right that we focus on the economy.

the problem I have is I don't understand how this fiscal responsibility legislation helps in any way whatever, because the process of deciding how you deal with the budget deficit is a political matter. It is a matter for the chancellor and, indeed, for me, as an opposition spokesman, to come up with different alternatives.

I would also like to see parliament be much more heavily involved in the scrutiny of public spending.

But passing a law saying the government must aim to balance its budget, or half of it, in four years, is completely pointless.

QUEST: What...

CABLE: There's nothing -- nobody is going to lock the chancellor of the exchequer in the Tower of London if he doesn't meet it.

QUEST: But where they have been used before -- and in the United States, they were used, of course, some years ago, similar sorts of ideas, where you can only have a spending plan if you make corresponding deficit cuts. So there are mechanisms by which this can work.

But if I understand you right, what you're saying is the plan doesn't have anything of that in it.

CABLE: No, it doesn't. And it -- it doesn't address what, certainly, the Liberal Democrats feel is one of the key deficits in the way in which our constitution functions. What happens is that parliament scrutinizes taxation very carefully, but it doesn't scrutinize public spending at all. I mean it's entirely a matter for government. We're the only country in the Western world that has this very unbalanced system.

And that -- if -- if we could -- we're trying to do something in the last few months of this parliament, trying to get things right, then that would be the issue to tackle.

QUEST: On the other side of the government's proposals, you've got this idea of the financial regulation, which, of course, involves ripping up bankers' contracts if they are excessive in some respect. There's a lot of disquiet about that, the proposals.

Do you share that disquiet?

CABLE: Yes, I do. I -- I suspect it's not been subject to any kind of legal scrutiny at all. And I think it's totally unnecessary. I mean there -- there are some very big issues, of course, around the banking system. We need to make sure that the big banks, particularly the semi- nationalized banks, are lending to solvent, good, small and medium sized companies.

Well, the government has powers to do that anyway, through its directors on the boards. It's necessary to have bonus discipline. And again, the Financial Service Authority, the regulators, have very substantial powers already. If there is serious abuse, then they can suspend people, they can withdraw banking licenses. It's not clear that they need any more powers...

QUEST: Right.

CABLE: And the big issue of the structure of the banks, the breaking up of the banks, which is potentially the biggest issue of all, is not addressed by legislation of this kind.

(END VIDEO TAPE)

QUEST: Vince Cable of Britain's Liberal Democrat Party.

In just a second, a country ravaged by civil war is back on track -- why investors could start thinking about Sierra Leone as a land of opportunity.

(COMMERCIAL BREAK)

QUEST: The president of Sierra Leone has appealed for an increase in foreign investment at a conference in London. The West African country has suffered for nearly a decade, as a civil war raged in the 1990s.

Meanwhile, the former British prime minister, Tony Blair, who was also at the conference, says that Sierra Leone is making progress.

I sat down with Mr. Blair and with David Carew, the Sierra Leonean trade minister.

The question for the minister first, how is it that investors now see the country as a good bet.

(BEGIN VIDEOTAPE)

DAVID CAREW, SIERRA LEONE TRADE MINISTER: I think they believe more in the quality of government. They believe in the security that we have been able to -- to portray. They also believe in the fact that there are opportunities. They just want to hear it again and again.

QUEST: So on that point, you've got the resource base of industry and economy, but you now have to convince people that not only the forms -- the reforms are taking place, but that they are sustainable.

CAREW: Ohm, well, the forms have been tracked. We are not just doing things. People are watching us. There's Transparency International. There's the Mo Ibrahim Index. And they have seen that we are doing the right things.

QUEST: One of the things which always worries me whenever I hear economies based on resources -- diamonds, oils, minerals -- is that it is a breeding ground for corruption unless there are the most stringent reforms in place.

CAREW: We've heard about that, too. But what we have done since we - - we obtained the government, is that we have enacted the most stringent anti-corruption legislation. And we have allowed it to work. We've got a commission that has enough power to prosecute any offender.

QUEST: How can investors be assured that money that goes in today will -- it will certainly provide returns in the future -- but that it's safe?

TONY BLAIR, FORMER U.K. PRIME MINISTER: Now, these investors are people who will demand the best, will demand a transparent process. And the president is prepared to give his own personal time as well as ministers like David in order to make sure they're properly looked after.

QUEST: I challenge that they will prepare -- that they care about transparency. I challenge that, Mr. Blair.

Is it not a case that in many cases, they just see a gold pot and they will -- or a honey pot -- and they want to get their paw into it?

BLAIR: I think the people that -- that they're trying to attract here in Si -- in Sierra Leone now are not like that. And there's one thing that we've learned about investment in Africa over time. If it comes in in the wrong way, in a corrupt or untransparent process, it doesn't last for the country or, indeed, for -- for the investor. So what they're trying to do now and the reason they've signed up to the Extractive Industries Transparency Initiative is precisely to make sure that, for example, when they privatize their port, which they're doing -- it's one of the finest deep sea ports in the world, eventually -- they are going to do it in a completely open way.

QUEST: Do you feel a special interest toward Sierra Leone?

I mean not just because of your own Africa initiatives, but, of course, you did -- I mean in -- in government, you sent troops. In peace or out of government, you -- you bring investors.

BLAIR: Yes. Actually, we needed to do both. But...

QUEST: Is that -- does that create a special relationship for you...

BLAIR: Yes. Yes, for sure.

QUEST: ...with the country?

BLAIR: For sure. Also, actually, my father taught in Sierra Leone back in the 1960s. So I -- I always had a feeling for Sierra Leone. But the thingle -- the single that's most important to me is I think we are at a moment where people -- investors, as I go around the world, investors, I think, are looking at Africa differently. They are prepared to come in and invest. There are funds being established to invest in Africa. There's a sense that maybe there are opportunities there that -- that -- that could be developed. And, you know, we'll wait and see.

But I think the turnout today -- and these were serious people, as I say, from -- from major funds, from Sutton World Funds, from banks, from private equity institutions, from individual companies. There -- there -- a lot of them are coming -- there's a far bigger turnout for today's investment conference than for tomorrow's donor conference, which, in my view, is quite a good sign.

(END VIDEO TAPE)

QUEST: The former British prime minister, Tony Blair, along with Sierra Leone's trade minister.

Now, the -- as we take a look at the weather forecast, nice and warm if you're staying up in some European cities like Prague and Munich. I noticed -- Guillermo, I'm taking you to task. I noticed today -- all weather is local, really. And much as I'm interested in what's happening elsewhere, it's what's over my head that I'm most concerned about. And it looks like it's about to rain.

GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes, it is. It is. Sorry. It's the same system that I have here behind me that's bringing all that instability in the air. But we have to feel happy for Fionnuala, who is in Prague, and also for our viewers in Munich, in Stuttgart and in many other cities like Vienna, too, because this high is beginning warm conditions. We're talking about 10 degrees more.

So look at Munich. It should be 6 degrees in the evening, the afternoon 17. It's perfect. Then in the morning, it should be freezing point. It's 4, 5, six degrees. So that's good.

I have some other examples. For example, Paris -- you see the same thing, 16. Who care if it rains, it's not cold anymore. And then I have another one. Let's see, Prague, the one that I was talking about before, partly cloudy skies. Fifteen degrees should be fine. So that's really, really good. We're very happy for them.

Unfortunately here in Scandinavia, the Gulf of Bosnia here, we're going to see in the -- these countries, we're going to see some rough conditions; Northern Poland; also in Denmark. In Britain, we're going to see the rain coming and going with the winds.

When we get to the maps, the -- the delays that I have for you, you're not going to like it. But let's see London first. Some rain showers on Friday. You will notice an increase in clouds. Thirteen degrees. It's not bad. But 15 in Paris; 11 in Berlin. It's going to continue to warm up a little bit. Look at that. That's a mess.

So if you are going to Charles de Gaulle, Heathrow, Amsterdam, Dublin, Brussels, it is probably going to be a little bit complicated for you because of those winds. Copenhagen, the same thing. We may see rain there in Munich, but who cares, temperatures are nice.

And I leave you with those who never have any problems -- Milano, Rome, Barcelona and Madrid.

We'll see you on the other side of the break.

Stay tuned.

(COMMERCIAL BREAK)

QUEST: Some economies are coping with the world's general slowdown much better than others, according to analysts at HSBC. Now, they have identified what they call five European super states. That's not super states as in size. That's the -- they're the model performers that have done the best they could in difficult circumstances.

Now, two of the big ones, of course, France and Germany. Well, there are various reasons why those two emerged from recession. They were one of the first to emerge from recession because of the way their economies interact.

Poland is a really important one, emerging as one of the more robust European economies, set for 1 percent growth this year, which is a remarkable achievement.

Over here down in Turkey, we're expected to see 3 percent growth this year.

The one that they focused on particularly, the Czech Republic makes the list. HSBC says the country's finances in the Czech Republic are in much better shape than many other E.U. countries. It's expecting steady growth in the next few years. HSBC says we can all learn a thing or two from these states, particularly their innovation -- the way they were able to work out new ways of looking at existing problems.

Alan Keir is the group general manager at HSBC's commercial banking European division, the author of the report.

This was fascinating stuff -- super states, involving the Czech Republic at a turning point -- a new way of thinking to old problems.

(BEGIN VIDEOTAPE)

ALAN KEIR, HSBC: Well, I think the Czech Republic is quite interesting to look again, because I think it has all -- it has what (INAUDIBLE) a connectivity to Germany, but it's broadening out from that, looking to the more global markets now. And it really has been a big investor in technology and ICT. There's a much greater investment as a country in ICT. And I think that's enabled it just to be that bit more adaptable through this recession. And I think that's a very interesting learning point for some other economies, and, actually, for some businesses.

QUEST: So if we take the -- the non-five super states, which is pretty much everyone else that is still sort of suffering and lumbering, and particularly, for example, the U.K. and some of the other countries in Europe that are lumbering out of recession, can you prepare yourself for the next one, do you think?

Can there be a learning enterprise?

KEIR: I think there can be. I think there are some real lessons out of this. And I think it would be foolish for us all not to learn the lessons of -- of this recession. For me, there are things like reaching out to academia to understand where technology is going in your field and how you can bring that into your business. I think there is too little of that that goes on. And if you look at those sort of super states, they've done that more effectively.

I think there are some lessons to learn about the style of management. Being more open and forward thinking, I think, is clearly one of them. And to help you with that, driving innovation and technology into your business. I mean we often think that German workers are well trained, yet in this report, nonetheless, despite all that, Germany still has a real focus on extra training, developing social capital in its business model, because it sees that as the way to drive technology and innovation into, one, its export markets; but, two, doing that much more cost-effectively, which is clearly something they need to do.

KEIR: Of course, all of them are their own (ph). But no, we've -- but they're all -- there are chief executives out there who will do all these things. Of course, we're setting out a benchmark that actually people want to be -- judge themselves by.

But I think it just resonates because too often people don't reach out. I'm just as cooperative as, perhaps, they could be, and in the world that's going to come forward from this recession, I think having that more open and collaborative stance is going to be more important. And I think there is a little bit of a shift for chief executives. And I think that is a good point to take away and for them to consider.

(END VIDEO TAPE)

QUEST: And when I return, a Profitable Moment.

(COMMERCIAL BREAK)

QUEST: Finally, tonight's Profitable Moment.

As you've been hearing on this program, Britain's ruling Labor Party announced plans to cut the budget deficit by half in just four years. Also, it would pass laws that would allow authorities to rip up bankers' contracts that are considered to be too generous.

The government's opponent said it was all hot air. The stakes could not be higher. The British economy is one of the last to come out of recession. The budget deficit is north of 11 percent. Unemployment continues to rise.

The issues are economic and crucial. But ultimately, when all is said and done, the U.K.'s GDP requires a strong financial services industry.

When government spending fails and government seems to get out of control, well, then economics takes a back seat for the next few months. The next general election has to be called by June of next year. And in the meantime, politicians will be seeing green shoots in the economy.